Small businesses admit to being late payers
Small and medium-sized enterprises (SMEs) are not quite the punctual payers they think they are, according to a new study, with 69 per cent of finance managers admitting to being “frequent late payers”.
Wax Digital, which published the report, said it is “simply the result of inefficiency” and poor payment processing.
The findings coincide with a similar study, carried out by the Institute of Finance and Management (IOFM) and the Tungsten Network.
It attributed the biggest challenges to paying suppliers on time to slow internal processes (64 per cent), lack of automation (39 per cent), administrative errors (27 per cent) and managing cash flow (16 per cent).
The IOFM found that half (47 per cent) of small businesses delay at least one in 10 payments for one or more of the above reasons.
Both studies follow the introduction of the Small Business Commissioner’s website, a platform designed to aid firms in tracking down late payments.
Paul Uppal, the Small Business Commissioner, said firms need to know their rights and who to contact if they need further action to be taken when businesses they supply owe them money.
Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), added: “The UK is gripped by a poor payments crisis, over 30 per cent of payments to small businesses are late and the average value of each payment is £6,142. This not only impacts on the small business and the owner, it is damaging the wider economy.”